International debt collection: Morocco can do betterand

It is really difficult to collect debts held on Moroccan companies. Ac­cording to Allianz Trade’s Collec­tion Complexity Score, Morocco ranks 39th out of a sample of 49 countries. It comes just after countries like Togo, Turkey, and Argentina.

On the other hand, Morocco is ahead of India, Thai­land, Benin, and South Africa. Moroc­co obtains a score of 57, a slight drop compared to the previous edition, and therefore finds itself at a level of “very high complexity”. This ranking, which should give food for thought to poli­ticians as well as the business world, is also attributed to the long payment periods. “The average DSO (Days Sales Outstanding) in Morocco re­mains high, and the payment behavior of domestic companies is deteriorating with payments being made between 120 and 150 days on average”, notes Allianz Trade. Long payment terms are penalizing, regardless of the origin of the company. At the local level, small and medium-sized entities are the first ones to bear the brunt of late payments. Morocco has certainly prepared a le­gislative framework to bring the situa­tion to order, but the process is falling behind schedule. The project, which is treading water, should bring a major novelty. The Government, through the DGI (General Tax Directorate), would become a full party in the commercial relationship between a customer and its supplier. The Government would intervene through monetary sanctions against customers who pay late. This project also plans to temporarily in­crease the legal deadlines to 120 days instead of the current 60 and 90 days. Businesses, on the other hand, should self-declare their late payment situa­tion once a year. Allianz Trade, which screened 49 countries representing 90% of global GDP and 85% of inter­national trade flows, also points to the judicial system. “It is a multi-layered system which remains under influence and is criticized for its lack of organi­zation, efficiency, and transparency”. The trade credit insurer also believes that “commencing legal action would be unreasonable in most cases, while enforcement judgments would be diffi­cult”. Insolvency procedures exist but they are considered “complex, slow, and mostly inefficient when it comes to collecting debt”. In any case, Morocco can do better! That said, Moroccan ex­porters are in turn exposed to the com­plexity of collection: “Among the 10 main trading partners of Morocco, 5 countries have a remarkable collection complexity index, and two countries obtain a very high index: the United States and India”, notes the Allianz Trade study.

Khadija MASMOUDI